The support and discipline of a One Stop franchise proved to be an ideal platform for retail novices Sunil and Arun Malhotra
Any time you make a major change in life, you need the support of the right people around you.
Having trained as an accountant, Sunil Malhotra had a steady job with Northumbria police but, in his 30s and faced with changing commitments, he didn’t feel he was where he wanted to be with his career. His brother Arun was at a similar point in life, so it made sense for them to team up and start their own business and, as retail was in the family - their father owns a shop in the North East - opening their own c-store seemed a good move.
One Stop South Shields, Tyneside
Size: 730sq ft
Opening hours: 7am to 10pm
Turnover: £19k average, £21k peak
Features: meal deals for lunch and dinner
After a few months of looking around, they found a Best-One branded shop with potential, in an area they knew, and bought it from the owner, who was looking to retire. Located as it was on the main drag from the South Shields Metro station to the beach, with a caravan site nearby and guest houses opposite, it seemed to offer plenty of potential. But nothing quite prepared them for life as retailers.
“We were a bog standard cheap beer and fags corner shop. We sold a lot of pop and confectionery, too, but we didn’t have a consistent range,” Sunil tells C-Store. “When we took it over the shelves were full, but it took us a year to get rid of some of the stock. We had 18 different types of soup on shelf; in the end we gave most of it away to a local food bank.
“We had no experience of retail, so we focused on customer service. We thought we were doing okay, but the only way we had of knowing this was how much cash we had left over at the end of the week.”
At this stage the brothers still might not have known exactly what they wanted, but they knew this wasn’t it. Then they read an article in C-Store about One Stop franchises, and they realised it might be exactly what they were looking for.
“We wanted something better planned and more structured, something more business-like. We saw the same people every day, but they were usually holding a Morrisons or Asda bag and buying just one thing from us,” says Sunil. “We wanted to find a way of making them buy the stuff that was already in their carrier bags from us instead.”
It only took a couple of conversations for the brothers to be convinced that One Stop was the answer, and when it came to the transition, they were doing most of the pushing. “A lot of our trade is seasonal and we wanted to have everything in place before the World Cup started. So once we got the nod in early May we only had a window of a couple of weeks to get things done. But they made it work.”
Ranges were cut back in some areas, and expanded in others. Opening hours were extended and an impressive new counter was installed. Crucially, the store was enlarged from a tiny 500sq ft to a still compact 730sq ft. To do this, the former stockroom was converted into sales space, with an unwanted garage becoming the new stockroom. But thanks to regular deliveries from One Stop, the need for space has reduced anyway.
“We couldn’t fault the depot or the service at Bestway, but we have a structure to our supply chain now. It’s predictable; we have a routine, we have support. In short, we have a business.”
Alcohol is still a vital category and occupies a high proportion of the space, but Sunil’s wish for a broader range to appeal to a wider range of customers has been met. “Sales have gone up across the board,” says Sunil. “We have a proper chilled offering. It’s consistent and growing. We previously had no fresh fruit & veg because we couldn’t get a reliable supply, but it sells really well now. And for sandwiches we used to order maybe five or 10 packs, three times a week. Now we get fresh sandwiches every day, with a meal deal already included, and customers love it. We can do evening meals with three items for £6 - ready meals, dessert, garlic bread. We couldn’t offer that before. Our sales mix has totally changed.”
For the first time since he took it over, Sunil believes that the store is finally catering for all visitors who have come to the town to visit the beach and enjoy the unique brand of fun the North East has to offer.
“We didn’t even do impulse ice cream before!” he says, shaking his head in disbelief at his former self. “We assumed that as we were on the coast people would just want a traditional cone. But now we have a Wall’s freezer, they are flying out! A lot of the local landladies shop here, too, and we never used to see them before. They buy bread, milk, household goods, stuff they have run out of in their guest houses. What One Stop has given us is brand power and we are taken seriously as a shop now.”
Contrary to popular opinion, the range at a franchise store is not fixed in stone, and is constantly being tweaked based on the store’s sales figures, but also with the franchisee’s input.
“We had a bit of flexibility in our fresh meat range. I felt we had too many chicken lines so I asked for burgers and some pork loin, and One Stop sourced it for me. Also Strongbow Dark Fruit wasn’t on the original planogram, but I knew it was popular around here so I asked for it to be included. And a few days later it was on the plan for us.”
Despite the small floor space, Sunil has room for five mobile stands to house One Stop’s legendary promotions, but some of the changes the group recommended were heavily margin-positive.
“For some products, such as milk, our prices actually went up. We were at £1.25 and now we’re at £1.39 - it really panicked us, because everyone else seems to be trying to bring their milk prices down to £1. But One Stop said ‘Trust us, we sell it at this price in all our stores’. I can’t understand how, but it works!
“But we trust in them. We are like sponges, absorbing what they tell us, and as a result of their advice we have a different sales mix, a different customer mix and consumers have confidence in us and our brand. The model gives us better stock control and cost control, but the main thing we have bought into is knowledge of the market. I genuinely believe they are the best at what they do.”
It all adds up
Weekly turnover at the store prior to the refit barely touched £12k, now it averages above £19k and has hit £21k. And further progress has been made after the One Stop sign first appeared over the door: since June average basket spend has risen from £4.50 to £4.80, and margins have increased from about 15% to just under 20%. The store is actually selling fewer packs of cigarettes, but is making about the same in cash terms from the category as margins are better.
As a former accountant, access to all these numbers is invigorating for Sunil. “It’s a thrill to have a proper epos system to work with. I can see exactly what the margin is, and what the business is making. It gives us confidence we’re running a proper business,” he says.
Sunil resists making further comparisons with the way the store used to be. “I honestly don’t think that’s a fair comparison to make. It’s just not the same business.”